"On the evening of 24th October 2014, Hoa Binh House Corporation and Chip Eng Seng Corporation Ltd (CES) signed a contract to transfer The Ascent project. Accordingly, Chip Eng Seng will transfer all shares to Hoa Binh House and consult on the development of the project. Also, National Citizen Bank (NCB) and Hoa Binh House Corporation have signed “Credit commitment contract” for The Ascent project with the amount of 200 billion dong.
With a total investment of 600 billion dong, The Ascent project is located at No. 58, Quoc Huong Street, District 2, Ho Chi Minh City with 6,677m2 of land area, two 29-storey towers with 280 Singaporean standard apartments. Currently, the project has completed foundation and ground floor. Apartments are xpected to be handed by November 2016. After the signing ceremony, The Ascent project will officially open for sale."
Probably won't make a big difference, at least they are following up on their Vietnam investments many years ago. Anyone remembered why did they want to exit Vietnam in the first place ?
1. According to some online news and forums, CES’ Victoria Street (Carlton Brewery) site in Melbourne might have received approval, albeit with a bit of reduction in saleable space due to height changes. If this is true, then it’s positive, as it clears the uncertainty of the project. The project would still have a substantial GFA (if I am not wrong, its 1m sq ft), but for now I would not account for its revenue and profitability. I hope the co launches this project soon, although it will then be exposed to the risk of construction costs at 2 substantial projects, should TM clears the neighbour hurdle.
2. CES was awarded another substantial HDB project yesterday, this time for $233m of building works in Woodlands, adding to its $548m June 2014 construction order book.
3. CES’ 2 sites win in Fernvale, Sengkang is positive compared to recent site wins in the area and the rest of Singapore, as well as selling prices of nearby projects. The co paid only $438 and $448 psf for the 2 sites, vs UOL’s $489psf win for nearby Riverbank and FCL consortium’s $533psf win for Rivertrees. Rivertrees was launched recently at $950-1,150psf, and I expect CES to undercut this price to move its units faster due to the bigger number of units and lower land price. The CES sites are just next to an LRT station, and within a 5 min walk to Seletar Mall, which will open soon as the biggest shopping complex in Sengkang with cinemas, BHG and Fairprice Finest. This should boost the amenities selling point for CES’ project. I expect CES to make a gross profit of $70-90m for its 60% stake in these 2 sites.
4. There is some noise in forums on whether Alexandra Central would TOP by end 2014. I think this is just a slight timing issue, and quite immaterial. The adding of 25-30ct EPS on TOP will lead to a jump in NAV, but the market might have discounted this somewhat. Nevertheless, a generous dividend payout of 6ct or more may still give the stock a fillip.
5. At Nine Residences, CES has now sold about 79% of the 186-unit project. 100PP has achieved 80% sales as at June 14.
6. There is some news out of Vietnam, but the figures for CES’ Viet interest appear small, so barring more information on that front, I would not account for it for now. (Thanks, Axe, for the link)
7. Q3 results out this month should include the lump sum profit from DBSS project Belvia. This could come in at about $50m (gross profit), boosting 9M profit quite a bit. I do not expect any special interim dividend as the company may need to keep cash for contingency use in Australia, especially if it quickly launches its Victoria Street site before demand in Melbourne CBD slows down.
8. CES had provided more information on its Perth Scarborough (beach area) site. The land has a GFA of 486,113sf, and only cost the co A$20m, or A$41psf ppr, a tiny fraction of the S$444psf it paid for the Sengkang sites in Singapore. At Victoria Street site, if the GFA is indeed 1m sq ft, then the land cost appears to be only A$31.70 psf ppr. With such a low land cost psf, risk Down Under is pretty manageable despite worries that pop up now and then about Singapore developers venturing into Australia.
9. CES is still an exciting stock for me, and hence, remains my top pick.
CES success issue $150 million MTN at 4.25%
From my record, Junction 9 has sold out.
Alexandra Central left 1 unit
100 PP left 9 unit
Potentially, CES will need more fund to flow in for the up-coming project. Hence, I agree that no special dividend or even next year, we should expect the same dividend of 4 cents.
Upcoming project expecting:
1) 170 Victoria Street
2) DONCASTER, Melbourne
3) Melaka Raya
4) Fernvale Road
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